LFP047 – The Impacts of the UK IFISA on P2P with Jake Wombwell-Povey CEO Goji

I am delighted to welcome Jake Wombwell-Povey co-founder and CEO of Goji to dive into the fascinating subject of –the Innovative Finance ISA. Goji’s aspiration is to take P2P into new investor markets and their first focus is on providing a white-label/back-office IFISA solution to existing platforms.

The IFISA might be unknown off these shores but here it’s generated plenty of excitement in the P2P community. There are direct impacts of the IFISA (which I had spotted) and some indirect impacts (which I had spotted less).

But for those offshore folks who don’t know what an ISA is, basically UK tax payers have been able to shelter a small amount of investment money every year from tax forever – income or capital gains. It was introduced way back in 1986 by Nigel Lawson under Margaret Thatcher’s government to encourage wider equity ownership. In those days it was called a PEP. Over the past 30yrs the whole thing has got more complicated and changed its name to ISA but the principle of away from the taxman remains. The current limit is £15k per annum.

In the Fintech-emergence year of 2014 George Osbourne announced in his budget that ISA eligibility would be extended to include P2P loans. In the 2015 budget it was confirmed that from 6th April 2016 lenders will be able to hold AltFinance assets in an IFISA.

Since then there has been much work on clarifying where we are – and perhaps preparations are not all entirely in place even a few weeks before the start-line as we will here.

If this all sounds very abstract the excitement stems from the fact that each year it has been estimated that approximately £50bn is invested in ISAs. And you can imagine how keen platforms are to get there paws on a percentage of that.

– in summary the twofold nature of the IFISA is of most note – not just the flow of money into the sector but, in essence, pressure on the industry to get more grown-up in line with existing mature assets classes such as equities.